OTTAWA, Nov 28 (Reuters) - Currency markets calmed on Monday
in Asia after the initial shock of Omicron's discovery sent
investors scurrying for cover last week, but analysts warned of
more volatility with little still known about the new
The risk-sensitive Australian dollar rose 0.37% to
$0.7139, recovering after a 1% tumble on Friday that saw it dip
to $0.71125 for the first time since Aug. 20.
The Mexican peso also rebounded, surging 0.93% to
21.7280 per dollar, after slumping to its weakest in almost 14
months at 22.1540 on Friday.
The safe-harbour yen, which had been the biggest
beneficiary of the flight to quality, weakened 0.09% to 113.60
per dollar. The Japanese currency surged as much as 2% at one
point on Friday to 113.05.
Fellow haven the Swiss franc sank 0.45% to 0.9257
The South African rand recovered from Friday's
one-year low at 16.3675 per dollar, jumping 0.93% to 16.1400.
South Africa discovered the Omicron variant last week, and
countries globally have been quick to tighten border controls
with mutations in the spike protein suggesting it could be
resistant to current vaccines.
Despite the speed of the response, Omicron has since been
detected in places including Australia, Britain, Canada, Germany
and Hong Kong.
On a reassuring note, a South African doctor who was one of
the first to suspect a different coronavirus strain said that
symptoms of Omicron were so far "very mild".
BioNTech said Friday it may know within two weeks if the
vaccine it developed with Pfizer needs to be reworked.
"Until then, market volatility is likely to remain
elevated," Rodrigo Catril, a senior FX strategist at National
Australia Bank, wrote in a client note. "Markets have been
forced to reassess the global growth outlook until we know
"We expect currencies to be volatile this week," echoed
Joseph Capurso, a strategist at Commonwealth Bank of Australia.
"It will not take much negative news about Omicron to push AUD
President Joe Biden will give an update later on Monday of
the U.S. response to the new variant.
The U.S. dollar index - which measures the currency
against six major peers - traded at 96.283, after dipping to a
one-week low of 95.973 on Friday.
While the dollar stands to benefit from the uncertainty
because of its status as a safe haven, Omicron clouds the
outlook for when the Federal Reserve - and other global central
banks - can raise interest rates.
The euro, which jumped 0.98% on Friday as traders
closed out short positions, dropped 0.32% to $1.12785.
Several officials from the European Central Bank, which has
maintained a dovish stance in the face of mounting inflation
pressures, have speaking duties on Monday, including ECB
president Christine Lagarde.
Sterling was about flat at $1.33325, off Friday's
11-month low at $1.3278.
In cryptocurrencies, bitcoin edged higher to
around $57,400, continuing a recovery from Sunday's one and a
half-month low of $53,308.93.
(Reporting by Kevin Buckland; Editing by Lincoln Feast.)